Lessons from Turpin on reasonable expectations in health insurance

RavenLaw gratefully acknowledges the contribution to this blog by Taylor Akin, Student-At-Law

By now, many of us have heard of Jennifer Huculak-Kimmel, the Canadian mother who was billed $950,000 when she unexpectedly gave birth while on vacation in Hawaii. Her baby was delivered nine weeks early by emergency C-section and had to be hospitalized for two months. Prior to leaving for vacation, Huculak-Kimmel had purchased travel insurance with Blue Cross and was cleared to fly by her doctor.  Blue Cross denied her coverage due to an alleged pre-existing condition. Huculak-Kimmel had contracted a bladder infection four months into her pregnancy and Blue Cross argued that this pre-existing condition made her pregnancy high risk and nullified her health insurance coverage.

In determining whether health insurance coverage is owed in these circumstances, recent Canadian judgments have applied the reasonable expectations doctrine. The British Columbia Supreme Court decided a similar (albeit less financially devastating) case that occurred in 2011. In Turpin v Manufacturers Life Insurance Company, 2011 BCSC 1162, Sandra Turpin experienced abdominal pain two weeks before a trip. She sought the advice of three different doctors and was prescribed antibiotics. She then purchased travel insurance and travelled to South California. Shortly after her trip began, Turpin felt unwell and attended a walk-in clinic. When a new prescription did not ease the pain, she spent 5 days confined to hospital.  Upon returning to Canada, she underwent an appendectomy. The family incurred just over $27,000 in medical expenses while on vacation that the insurance company refused to cover due to the alleged pre-existing medical condition.

In evaluating Turpin’s entitlement to coverage, Justice Echlin considered the reasonable expectations principle.  Although a clause in the health insurance policy excluded preexisting conditions, the court found that both parties reasonably expected Turpin to be covered on her trip. Justice Echlin followed the Ontario Court of Appeal’s earlier decision in Chilton v. Co-Operators General Insurance Company, (1997)  32 O.R. (3d) 161 (Ont. C.A.), where the Court of Appeal stated that “coverage limitations in insurance policies that conflict with reasonable expectations are not enforced even though the limitations are both explicit and unambiguous.”

Justice Echlin reached a similar conclusion: “Ms. Turpin was not eligible for medical coverage because she suffered an irregularity in her health, three days before the policy issued. The medical coverage is nullified. That is not what the parties expected. I find they expected that Ms. Turpin would be so covered.”

The question that arises in the Huculak-Kimmel case is whether the parties (that is, both the insurer and the insured) reasonably expected that the insured would be covered by her travel insurance in these circumstances. If so, does this reasonable expectation also extend to the insured’s baby?  It will be interesting to see how her case unfolds given this recent judicial willingness to hold insurance companies accountable for that which is reasonably expected – despite exclusionary clauses.

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]